1. Fix interaction with water. Pretty much all interaction with water.
2. Don't lock anything behind defeating bosses. Add other rewards for defeating bosses to incentivize it, but don't arbitrarily limit non-linear progression by making us jump through hoops.
3. Add more rare items, like the fishing pole and tetra fish in the caves. Give us a reason to explor more.
3b) Since it's related, I'm going to try to slip in a fourth: Get rid of the trader. He just seems so out of place. Alternatively, weave him into the rare items that I mentioned. Add more of them that sell rare items that you can run into occationally.